What people are saying

Capitol Hill can seem like one large, elite clique, where pay-for-play politics has a more prominent seat at the table than constituents. Consumer Lobby Day [a Washington, DC, event, of which Consumer Action was one of the planners] showed me that this isn’t always the case. Meeting Congresspersons humanizes them in a way that only proximity can do. And they were happy to see us, too—they told us many times that they wish their constituents would visit more often. This personalized representative democracy for me, which is a welcome feeling in times such as these. I am already excited to go back next year! — Parker Lumkes, Financial Coach, Financial Stability & Career Services, Catholic Charities of Dallas

Did you know?

Approximately every 30 minutes, a child in the U.S. is injured as a result of a TV or furniture tip-over incident. The Anchor It! campaign is an effort by the U.S. Consumer Product Safety Commission (CPSC) to educate parents and caregivers about these often-tragic domestic dangers and to urge simple, low-cost action to prevent them. The campaign website offers videos in English and Spanish and easy instructions on how to childproof your home by securing your belongings.

Education module prepares homeowners and renters for disaster

With the majority of U.S. residents living in areas at risk of a natural disaster, most households need to seriously consider how they would recover from the loss of their home and possessions. Extreme weather events caused a total of $306 billion in damage in the U.S. in 2017, making it the most expensive year on record for natural disasters, according to the National Oceanic and Atmospheric Administration.

To help homeowners and renters protect their assets before a disaster and recover if disaster strikes, Consumer Action has created a “Disaster Coverage” education and training module. The module consists of two consumer fact sheets, an in-depth Q&A (designed as a backgrounder for community educators but available to consumers as well), and a trainer’s curriculum and companion PowerPoint presentation.

The second fact sheet, FEMA Spells Federal Disaster Relief for Homeowners and Renters, describes the types of Federal Emergency Management Agency (FEMA) assistance available to homeowners and renters and provides details about program eligibility and the application process. It also highlights the limitations of FEMA assistance and stresses the importance of purchasing adequate personal insurance coverage.

The publications include advice for avoiding disaster-related insurance and FEMA scams, as well as resources where consumers can learn more about FEMA programs and the National Flood Insurance Program (NFIP). They also provide guidance on how to navigate the insurance claims process.

While insuring their home and belongings won’t help consumers avoid any disasters, it will help them recover. Private insurance is vital, even for those without a lot of assets to replace because, in many cases, it covers the costs of being temporarily displaced due to destruction of, or severe damage to, the policyholder’s home. While FEMA grants, housing assistance and loans are a crucial resource for victims, assistance is limited and is not designed to take the place of personal insurance.

“With employees in both severe storm territory (D.C.) and earthquake and wildfire territory (California), Consumer Action is keenly aware of the risk of natural disaster and the costs of being unprepared or misinformed,” Executive Director Ken McEldowney said. “In creating our new educational resources on disaster coverage, our goal is to spur consumers to take action before they experience a loss, and, if a disaster occurs, to guide them onto the road to recovery.”

The Disaster Coverage module was created under Consumer Action’s Insurance Education Project. All components of the module are available for free download from the Consumer Action website, with the two fact sheets also available in print (for bulk order by community educators). The fact sheets have already been translated into Spanish and Korean, with the Chinese and Vietnamese translations available by the end of July.

Teaching consumers how to evade scammers

The day this article was being written, news headlines announced the arrest of 74 criminals who had spoofed U.S. corporate CEO email accounts and obtained millions in payments for bogus bills from deceived employees. Despite occasional law enforcement successes like this one, the number of people victimized and dollars lost to scams increases every year.

To help consumers protect themselves against a constantly evolving arsenal of cons, Consumer Action has developed an educational module that prepares users to recognize the telltale signs of a scam, which include emails or calls coming from random contacts, manufactured urgency, a request for money or personal information, a threat or enticing offer, or a demand for an untraceable/unrecoverable method of payment. The resource instructs consumers on how to use the internet to verify, vet and validate questionable communications and includes detailed information about dozens of specific, widely perpetrated scams, including how they are typically carried out, how to recognize them and how to respond.

The Scams module consists of:

Just Say No to Scams: A guide to protecting yourself from liars, cheats and crooks: This 10-page consumer guide helps consumers to understand how crooks reel in their prey and to recognize and evade scam attempts as well as learn about scam prevention and reporting resources. A detailed section on “phishing” empowers readers to avoid one of the oldest and most widely used methods by which scammers convince someone to reveal sensitive information that can be used to steal their money, identity or security.

Just Say No to Scams “quick tips" sheet: This two-page summary of the key points in the full-length consumer guide teaches readers the basics of scam recognition and prevention and provides links to resources where consumers can learn more. Formatted as a two-sided black-and-white publication, the tip sheet is easy and economical for community educators to print and distribute.

Common Scams: Recognizing and avoiding fraud: For use by educators and anyone else who wants greater detail about specific scams, this 22-page compendium of dozens of widely perpetrated scams is broken down into the demographics that the scams target (general population, seniors, veterans and servicemembers, immigrants and students). Each entry explains the typical tactics used by scammers, how consumers should defend themselves and respond, and where to report particular types of scam attempts.

A curriculum (lesson plan) guiding community educators through a two-hour group seminar. The curriculum includes class activities.

A PowerPoint presentation, designed to be used in conjunction with the curriculum. The slides provide a visual component to the training that helps engage learners and improve retention.

“If we can’t put scammers out of business entirely, the next best thing is to empower would-be victims to shut them down whenever they come calling,” Linda Sherry, Consumer Action’s director of national priorities said. “These new materials arm consumers with the knowledge and tools to do just that.”

All components of the module are available for free download from the Consumer Action website.

Hotline Chronicles: Home warranty water heater headache

Toby* from Virginia contacted our Hotline to report his home warranty company after it took them three weeks and multiple stress-inducing back-and-forth arguments to finally fix his aged home water heater after it broke down. Toby and his wife had received a home warranty policy from their realtor as part of the deal when they bought their house. They decided to renew the policy with HMS Home Warranty the next year.

“We figured when we bought our home two years ago, which was built in 1987, that we would need to replace the original 20-year-old water heater sometime in the near future. Since that could cost us thousands, we decided to renew our home warranty policy to save ourselves the financial burden down the road,” Toby said. “Little did we know the headache and hassle we would suffer just to get a new one installed, and that the warranty company would try to charge us hundreds of dollars anyways!”

The trouble began when the pilot light on the heater went out and Toby, a new father with an infant daughter and a wife who had just given birth, placed an initial claim with HMS. An inspector from a local company of HMS’ choice came out and was able to get the water heater running by re-lighting the pilot light (something that Toby told the inspector he had already done many times). As soon as the inspector left, the light, predictably, went out again and the water in the home quickly became tepid, then cold.

“Trust me, you do not want to have to bathe a newborn in freezing cold water,” Toby said. “The screaming, the crying, the horror—I needed to get this water heater fixed, and fast!”

Toby called the HMS representative back and told them that it was clear the heater needed to be replaced. The representative told him that HMS would look into it. Eventually, the representative called him back and told him that the company was “recommending replacement of the unit” but had kicked the case over to its “research branch.”

“When I asked HMS what that meant, I was told, in so many words, that it’s the department that looks for the cheapest possible replacement they can provide that meets the same basic specifications as the existing unit,” Toby explained.

After several more days of cold showers and nightmare baby bath times, Toby decided to call the water heater company that initially inspected his heater for an update. He was told by this (more helpful) company that he had been approved for a new heater, but that replacing it would “take a couple more days.” Two full weeks after the initial complaint, the water heater company HMS had chosen called Toby back to finally share the wonderful news that HMS had finally approved his household for a new heater, which was scheduled to be installed the following morning.

Two hours later, however, Toby was contacted by a “very rude” customer service representative from HMS.

“This woman said she was the claims manager who was working on my case,” Toby said. “She informed me that the hot water heater could indeed be installed the next morning, but that I would have to pony up $444 in ‘non-covered charges.’ I told her that this was outrageous! What was I paying a monthly home warranty fee for? And I had already paid $100 for the initial water heater inspection!”

Toby’s realtor had signed him up for HMS’ "premium" level of home warranty service (which lasted a year) as a closing gift when he and his wife bought their home. When Toby went to renew the plan on HMS’ website a year later, he was met with some confusing options.

“When I visited the website to renew, I was presented with three options with varying fees and deductibles. None of the plans were labeled ‘premium,’ so I called an HMS rep for clarification and signed up for the plan that I was told was the same as the ‘premium’ plan that I had been enrolled in by my realtor.”

HMS, however, was now arguing that Toby was no longer enrolled in what they were calling the "premium" service plan, and therefore owed them the arbitrary fees.

“It seemed like a bait-and-switch situation and felt incredibly unfair,” Toby said. “It was clear to me that this was a last-ditch, desperate effort to get out of paying for the water heater, which HMS had already made me wait weeks to receive. Any reputable company would have been upfront about additional fees when I asked about signing up for the same warranty plan, but HMS waited to share this unwelcome news until after the vendor finally called to schedule delivery and installation of a new water heater!”

Frustrated, Toby told the HMS claims manager that he would pay to have the water heater installed (since his family desperately needed hot water), but that he was going to dispute the charges and hoped for a full refund.

This particular claims manager called Toby back and told him that HMS’ regional vice president had offered to split the “non-covered” charges with him. Toby was happy about that, but still didn’t believe that he should be charged at all. The next day, however, another claims manager called Toby and told him yet again that he would owe the full $444 if he wanted the heater replaced. Toby reiterated that he would pay whatever he had to upfront and dispute the charges later. The claims agent then became upset and angrily hung up on Toby.

“Despite dealing with so much nastiness over the phone, the previous claims manger had promised me that HMS’ selected vendor would install the water heater the following morning, so I took a day off of work to be home to oversee the installation,” Toby said. “Of course, the day that the heater was set to be installed, I had to call HMS to find out that it hadn’t been delivered to the vendor, meaning that my family would be stuck without hot water for yet another weekend!”

After three weeks, the water heater finally arrived. Toby believes that the water heater company decided not to collect the “non-covered charges” because of the many trials and tribulations HMS had put his family through.

“I still haven’t paid the $444,” Toby said. “No one has come to collect, and I’m just fine with that. But I keep expecting them to try. I feel like I have ‘home warranty PTSD’.”

“If you’re offered a free home warranty, take it,” Linda Sherry, Consumer Action’s director of national legislative priorities said. “But when it comes to purchasing one or renewing it, be sure to review the costs, policies and consumer feedback on the warranty company very carefully. Look for online reviews and forums, and ask to speak to other consumers who have used the company.”

You can look up home warranty companies on websites like HomeWarrantyReviews.com (where you can see that HMS gets poor reviews) and on the Better Business Bureau website and Angie’s List (where it’s now free to be a member). Before purchasing a warranty, check to see if the company will pay the full cost for replacing older appliances or only the depreciated value, determine what the fees are for service calls, and ask about any exclusions to coverage. Finally, read all the fine print before purchasing.

If you get an email that appears to be from the popular streaming video service Netflix, it could a “phisherman” reeling you in. Phishing is a type of cyber scam in which the scammer pretends to be a legitimate organization in order to lure their victim into giving up personal or financial information. Consumer Action responded to the widespread Netflix phishing scam with a timely bilingual alert to our allies—an alert that ended up garnering tons of media attention!

You may have first heard about the scam in the February issue of our Scam Gram newsletter (“Hooked on Netflix?”). The “Netflix” email asks recipients to resubmit their payment information due to a “processing problem.” Once the victim clicks on a link to do so, they’re sent to a convincing “lookalike” website that aims to steal their Netflix password and credit card number.

When a Spanish version of the fake message arrived in Consumer Action’s in-box, however, we realized that the situation was worse than we thought. To help head scammers off at the pass, Consumer Action’s Nelson Santiago promptly drafted, and posted on our website, a scam alert in EnglishandSpanish warning consumers of the hoax.

Santiago also shared the alert with Spanish language media outlets.

“News outlets immediately picked up on the warning about the phishy email and served it up to readers—fried and with a side of fraud prevention tips,” Santiago proclaimed.

Bad humor attempts aside, the alert did receive an excellent media response. Three news outlets ran the alert, or portions of it, including the bilingual San Francisco Bay Area weekly El Observador (based in San Jose), Denver-based weekly La Prensa de Colorado, and the Los Angeles-based daily La Opinión (along with cross-posting by its New York-based fellow, the impreMedia-owned daily El Diario). El Observador even featured a teaser about the alert on the cover page of its print edition and included both the English and Spanish versions in its pages. Check out the coverage for yourself via the links above and feel free to share it on social media (or with any consumers you may work with.)

Local consumers benefit from free financial resources in Fontana, CA

Consumer Action’s community outreach and training manager, Linda Williams, recently attended Fontana’s 15th Annual Community Assistance Program Resource Fair. The Southern California event was hosted by the City of Fontana Community Assistance Program and CityLink, the social services outreach arm of Water of Life Church. Both agencies provide vital services to needy residents of Fontana, including hygiene products to homeless populations, rental assistance to prevent homelessness, and life skills and financial counseling to low-income individuals and families.

Over 60 other agencies from all four corners of the Inland Empire and San Diego also attended the important event, including the Asian American Resource Center, Foothill AIDS Project, Valley Star Community Services, 211 and Purple Hearts (an agency that serves women throughout Southern California who are escaping domestic violence). Several local dignitaries showed up as well, along with a representative from the office of U.S. Congressman Pete Aguilar (D-CA).

The fair provided vendors with an hour to network with each other to learn more about the services they offered, before turning their attention to attendees. During the networking hour, Williams provided all 60 vendors with a brief presentation about Consumer Action and our many free resources. As a result of this networking, Williams will provide several agencies, including Purple Hearts, with free financial empowerment trainings starting in the fall.

When fair attendees arrived, Williams distributed a variety of brochures from Consumer Action’s longstanding Managing Money Project, which promotes wise personal finance practices and informed consumer choices. Williams also answered questions from the audience about how to recover from ID theft and how to handle debt collector calls.

“The Fontana community assistance event was a huge success,” Williams said. “Our free financial education materials will empower both regional community-based organizations and the often underserved consumers they serve.”

Coalition Efforts: From data protection to protecting the complaint database

If companies can protect user data in Europe, they can protect it everywhere. Consumer Action joined 27 groups in calling on some of the world’s largest companies—online giants such as Facebook, Google and Amazon, as well as digital advertisers like Nestle, Walmart and JPMorgan Chase—to use Europe’s recently passed General Data Protection Regulation (GDPR) as a baseline standard for all of their services worldwide, including those conducted in the U.S. The GDPR provides a framework for strong data privacy. Learn more.

Groups tell temporary acting CFPB director: Hands off the public database! Over 70 consumer, civil rights, fair lending, privacy, legal services and community groups called on Consumer Financial Protection Bureau (CFPB) Acting Director Mick Mulvaney to maintain one of the few tools consumers have to review the business practices of financial services companies (such as mortgage lenders and big banks): the CFPB's consumer complaint database. Mulvaney has threatened to ban public access to the (currently) public database. Learn more.

A terrible agenda for students and taxpayers. Consumer Action, along with over 80 organizations working on behalf of students, servicemembers, college faculty and staff and others, wrote to Congress to convey their strong opposition to provisions that would roll back or eliminate existing consumer protections in higher education via the dangerous PROSPER Act (HR 4508). The legislation would undo decades of work to protect students from costly, low-quality educational programs. Learn more.

If you were thinking that the interim director of the Consumer Financial Protection Bureau (CFPB) was done dismembering the Bureau from within, you would be wrong.

Mick Mulvaney, temporary CFPB director and Office of Management and Budget (OMB) director, recently asked Congress to put the independent agency’s budget under congressional control. Contrary to the way any other federal agency functions, he also asked Congress to require congressional approval for every new rule that the Bureau imposes and to allow the president to fire the director “at will” rather than “for cause.”

Mulvaney has revised the Bureau’s mission to focus on deregulation rather than consumer protection. So far, he has dismantled the CFPB’s student lending office and terminated two advisory boards. Most recently, he dissolved the Consumer Advisory Board (CAB), which the CFPB is required by law to meet with twice a year for guidance around major issues of importance to consumers, like predatory lending, fair housing and legal aid. Politically appointed spokespeople say Mulvaney plans to “restructure” the CAB with a much smaller, short-term board staffed with industry and consumer representatives with “specialized knowledge” of topics that the CFPB will be addressing in the upcoming year.

“Mick Mulvaney has no intention of putting consumers above financial firms that cheat them,” Senator Elizabeth Warren (D-Mass.) told the Washington Post. “This is what happens when you put someone in charge of an agency that they think shouldn’t exist.”

In June, another budget office employee, Kathy Kraninger, was named as the new nominee to run the Bureau. Unfortunately, Kraninger’s experience is in immigration policy at the Department of Homeland Security, not in consumer protection. At the time of this writing, Warren and fellow Senator Sherrod Brown were seeking answers as to what role the controversial nominee has played in the Trump Administration’s cruel policy to separate immigrant children from their parents. Mulvaney will continue to serve as acting director until Kraninger is confirmed.

CFPB requests for information

As we’ve reported in prior issues of the INSIDER, temporary CFPB Acting Director Mick Mulvaney has released one dozen formal requests for information (RFIs) seeking justification for all functions of the Bureau, including its useful public consumer complaint database (which he has threatened to hide from public view).

Despite the seemingly endless stream of requests, the more than 23,000 comments submitted to the CFPB overwhelmingly support consumers’ right to review and evaluate complaints in the public database.

CFPB in Topeka

In June, the consumer bureau held its first field hearing since the temporary director took charge last November. These hearings had been held monthly under the previous director, Richard Cordray. The Bureau often would announce new proposed rules or consumer-oriented initiatives at the meetings.

The theme of the Topeka, Kansas, meeting was fighting elder financial exploitation, although the CFPB allowed participants to raise other issues of importance to consumers. Housing counselors who attended the hearing told Consumer Action that they found the meeting to be “comfortable and productive.”

For information on managing financial matters for an elderly relative or another person, see the CFPB’s Managing someone else’s moneyguides.

Fighting foreclosure in the wake of natural disasters

If you or someone you know is still suffering the consequences of a hurricane or other natural disaster and struggling to pay the mortgage, the CFPB has links to government resources to help avoid foreclosure. The Bureau’s blog also directs readers to its 2017 financial toolkit for hurricane victims. The information is available in Spanish and English.

CFPB and OCC fine Wells Fargo (but the focus is not on consumers)

The CFPB and the Office of the Comptroller of the Currency (OCC) fined Wells Fargo a record $1 billion for requiring two million customers to pay for force-placed auto insurance policies (reserved for those who fail to obtain insurance on their vehicles), even after borrowers proved they had auto insurance. Approximately 27,000 Wells auto loan customers who defaulted on their loans as a result of the redundant auto insurance policies had their cars repossessed.

The agencies also levied the mammoth fine because the scandal-ridden bank charged 110,000 mortgage borrowers unnecessary rate-lock fees and, in general, failed to “detect and prevent unsafe and unsound practices.”

The CFPB/OCC settlement also compels Wells to create a remediation plan that compensates at least 50,000 consumers more than $10 million. However, advocates argue this plan leaves Wells with far too much control over which consumers get a refund and for how much. According to the settlement, consumers will receive redress if they’ve suffered “economic or other cognizable harm” or another violation that Wells “elects to include.” “Cognizable” means that the harm meets the criteria necessary to file a claim in court—a far higher standard than has been required to receive a refund from companies in the past. In previous cases, the CFPB would create a Bureau-managed restitution plan, determine who was eligible for compensation, and compensate consumers with funds it had collected from the corporate “wrongdoer.”

A class action settlement alleging Chase Bank engaged in inaccurate credit reporting was one of 12 new settlements added to the Consumer Action Class Action Database during June.

One notable class action is Valle v. Popular Community Bank. The plaintiffs in this case filed suit against New York’s Popular Community Bank (“Banco”), claiming that the bank artificially reordered the posting of ATM withdrawals and point-of-sale (“POS”) debit card transactions from highest to lowest to maximize the number of overdraft fees they could collect. Plaintiffs also claimed that Banco failed to provide real-time warnings (at the ATM or POS terminal) alerting customers that completion of the transaction would overdraw the account, resulting in more overdraft fees. Finally, plaintiffs stated that Banco provided inaccurate balance information both after an ATM withdrawal and when a customer using the ATM requested their balance, resulting in plaintiffs unknowingly overdrawing their accounts. Banco denied violating existing law, but agreed to a settlement to avoid the burden, expense and risk of continuing the lawsuit.

When banks subtract the largest transaction from customers’ accounts first, followed by the next largest (and so on, down to the smallest), the account reaches a zero balance faster than it might have if the smaller transactions were subtracted first. This leaves customers with more overdraft transactions, and, since each transaction that overdraws triggers a separate fee, the bank charges the customer more.

For example, say a bank charges $10 for each separate overdraft. A customer starts the day with a $20 balance and makes two ATM withdrawals of $10 in the morning and then one ATM withdrawal of $25 in the afternoon. If the bank posts the transactions in the order they occurred, the account holder would be charged one overdraft fee of $10 for the $25 transaction in the afternoon. But, if the bank reorders the transactions from highest to lowest, the $25 comes first, which results in a zero balance (-$5) and triggers three overdraft fees, totaling $30. Reordering the transactions costs the account holder $20 more in fees!

You are part of the Valle v. Popular Community Bank class if you have a Banco account in New York that incurred an overdraft fee at the POS terminal or ATM (due to Banco’s overdraft practices) between the dates of Jan. 25, 2012 and Sept. 30, 2014.

The settlement provides a $5.2 million fund and requires the bank to make changes to the disclosures provided to new account holders pertaining to its overdraft procedures and to the account balance information provided at its ATM terminals. Class members are eligible to receive 50 percent back from all initial overdraft fees and 50 percent back from one continuous overdraft fee (for every two initial overdraft fees) that they paid in connection with ATM withdrawals or POS transactions due to Banco’s overdraft practices during the class period. (A continuous overdraft fee is a separate fee charged after a few days—five, in Popular’s case—of maintaining a negative balance.)

Class members can look up the number and amount of overdraft fees charged to their accounts between Nov. 14, 2009 and Sept. 30, 2014 on the settlement website.

About Consumer Action

Consumer Action is a non-profit 501(c)(3) organization that has championed the rights of underrepresented consumers nationwide since 1971. Throughout its history, the organization has dedicated its resources to promoting financial and consumer literacy and advocating for consumer rights in both the media and before lawmakers to promote economic justice for all. With the resources and infrastructure to reach millions of consumers, Consumer Action is one of the most recognized, effective and trusted consumer organizations in the nation.

Consumer education. To empower consumers to assert their rights in the marketplace, Consumer Action provides a range of educational resources. The organization’s extensive library of free publications offers in-depth information on many topics related to personal money management, housing, insurance and privacy, while its hotline provides non-legal advice and referrals. At Consumer-Action.org, visitors have instant access to important consumer news, downloadable materials, an online “help desk,” the Take Action advocacy database and seven topic-specific subsites. Consumer Action also publishes unbiased surveys of financial and consumer services that expose excessive prices and anti-consumer practices to help consumers make informed buying choices and elicit change from big business.

Community outreach. With a special focus on serving low- and moderate-income and limited-English-speaking consumers, Consumer Action maintains strong ties to a national network of nearly 7,000 community-based organizations. Outreach services include training and free mailings of financial and consumer education materials in many languages, including English, Spanish, Chinese, Korean and Vietnamese. Consumer Action’s network is the largest and most diverse of its kind.

Advocacy. Consumer Action is deeply committed to ensuring that underrepresented consumers are represented in the national media and in front of lawmakers. The organization promotes pro-consumer policy, regulation and legislation by taking positions on dozens of bills at the state and national levels and submitting comments and testimony on a host of consumer protection issues. Additionally, its diverse staff provides the media with expert commentary on key consumer issues supported by solid data and victim testimony.